FBT changes come at cost

NEW Fringe Benefits Tax (FBT) regulations applying to company vehicles may assist in reducing carbon emissions.

However, according to a leading fleet solutions company, FleetPartners, this will come at a big cost to businesses requiring the use of vehicles.

The Federal Government introduced FBT concession changes on company-provided cars from the previous sliding scale to a flat 20% in the past month’s budget.

FleetPartners local business development manager Rebecca Lamb warned that north Queensland owners of tool of trade vehicles could face higher running costs and tougher compliance under the new FBT regime unless they review the operation of their fleet and its management.

The government argued that the current FBT rates, which range from 7% for vehicles travelling more than 40,000 kilometres a year to 26% for vehicles travelling up to 14,999 kilometres, encouraged motorists to drive further to increase their tax concession.

This system will be replaced by a single flat rate of 20%, the rate currently applied to vehicles travelling between 15,000 and 24,999 kilometres a year.

Ms Lamb said that local drivers who predominately drive more than 25,000 kilometres a year will feel the full effects of the introduction of a 20% flat rate if they continue to use the current statutory method for calculating FBT.

“Many local businesses will see an increase from 7% to 20% for all their vehicles that travel more than 40,001 kilometres per year; financially that is a jump from $2352 to $6720 per vehicle under the new system.”

FleetPartners chief executive officer Nick Johnson said fleet managers faced significant costs to their business and their mobility if they did not move quickly to understand the new FBT rules and introduce systems to manage reporting and compliance.

“There are ways to mitigate the increase in costs that will hit fleets with these changes.

"It will require an examination of current practices and the introduction of change,” he said.